In the market for devices and software, pre-installation of software and services, such as online services, has become key to profitability for electronic device manufacturers such as original equipment manufacturers (OEMs), etc. For example, for OEMs, pre-installations or preloads account for a growing portion of device profitability. For instance, over the time frame of 2007 to 2012, the average selling price of a personal computer (PC) is expected to decrease over 7% year over year, while OEMs are expected to make about a 5-10% margin on the hardware. Thus, it is clear that payments by independent software vendors (ISVs) for pre-installation of software or services can have the ability to drastically impact the dwindling hardware margin.
However, whether it is for a large PC and laptop manufacturer bundling an antivirus application with a PC or laptop, or whether it is a small mobile phone manufacturer preloading internet search functionality on a new mobile device, conventionally, there is no efficient way for buyers and sellers of the multitude of software or services available from ISVs to see what placement opportunities are available for the myriad of OEM devices, which are ever diversifying with shorter and shorter obsolescence cycles, and to transact business therefor. As a result, such transactions are typically limited to extremely high volumes of business where the excessive transaction costs are more easily offset by the extremely high volumes.
For example, for ISVs, pre-installation of software and services, or preloads, can result in discovery of the availability of the software or services, and can present an easily accessed opportunity to a user to convert from the pre-installed version of the software or services (e.g., trial versions, limited functionality versions, inactive versions, etc.) to an enhanced access version of the software or services, based on a purchase, subscription, and so on, of the enhanced access. For instance, typical conversion rates for pre-installation of software and services can range from 25% for applications or services such as antivirus applications or services to 5-7% for productivity software or entertainment services. However, an ISV that desires placement on an OEM device would typically have to craft a unique or custom image of the software or service for the particular OEM device, which may have limited applicability to another disparate OEM device. Accordingly, each particular placement on a particular OEM device can have transaction costs for the ISV associated with the particular placement.
In addition, as described, due to high transaction costs transactions for the pre-installation of software and services on OEM devices, transactions are typically limited to situations involving extremely high volumes of business where the excessive transaction costs are more easily offset by the extremely high volumes. Thus, deals for preloaded software or online service are conventionally made in one-off, large-scale, and manpower intensive negotiations, where the ability to recapture or reuse information gained in the negotiations is highly limited. For instance, preloaded software or online service deals are typically made between the largest software or service providers and the largest OEMs or device redistributors (e.g., so-called Tier 1 OEMs such as Hewlett Packard®, Lenovo®, Apple®, Dell®, Samsung™, etc.), based on extremely deal-specific terms and conditions that typically do not easily transfer and apply to another deal with one or more different parties to the deal.
Moreover, these deals are typically only two-party deals made between one specific software or service provider and one specific OEM or device redistributor for the pre-installation of the provider's software and/or services on the OEM's or the redistributor's devices, to the exclusion of all other potential market participants (e.g., other OEMs, device redistributors, software providers, service providers). That is, when the deals are struck between the largest ISVs and the largest OEMs, smaller ISVs and OEMs are typically excluded from participation (e.g., as a result of proprietary concerns, as a practical matter, etc.).
Accordingly, it can be understood that such closed markets and negotiations result in inefficient pricing for the pre-installation of software and services resulting from high information costs, imperfect information, lack of available substitutes, etc. As a further result, these excessive transaction costs can practically prevent certain participants from gaining access to the markets for preloaded software or online services. For instance, in the conventional deal, unless an OEM or an ISV can support sufficient shipments of devices or result in sufficient conversions of preinstalled software or services, then the likelihood that such a deal would provide revenue in excess of the transaction costs to strike the bargain (and/or perform to its conditions) can be slim. Thus, as described, these transaction costs and entry barriers can practically preclude small or mid-size OEMs and ISVs from engaging deals.
In addition, conventional deals as described typically lack the ability to track deal level information. For instance, while conventional deals may be able to track gross conversion information based on hardware or software specific information (e.g., what hardware is the source of the conversion based on a hardware identification (ID) number, what browser, operating system and so on is used to convert the preinstalled software or service, etc.), how the conversion is related back to the terms of the numerous conventional deals can typically remain a mystery. For example, while an ISV may be able to tell based on a hardware ID that a particular device is responsible for the placement or conversion (e.g., a particular processor, etc.), the ISV may not be able to tell that the hardware was configured with the placement by a particular deal counterparty (e.g., Dell®, Nvidia®, Adobe®, Best Buy®, etc.). In addition, the ISV may be further ignorant of one or more of the deal terms for which a conversion or other event has been contracted. As a result of this inability to accurately track the performance of the contracts for placement or conversion to the terms of the conventional deals, the market participants (e.g., ISVs and OEMs) are further prevented from accurately determining the pricing and profitability of such contracts, thereby providing further barriers to entry in the market for the pre-installation of software and services.
Moreover, the deficiencies associated with the inability to track the performance of contracts on a deal level illustrates further how the lack of sufficient information regarding contract performance precludes efficient pricing of the placement opportunities on devices. For instance, optimized placement and pricing, such as placement and pricing based on regional demands, historical performance metrics, market analysis, or other important information, is simply not available as a result of the closed, proprietary, or one-off nature of conventional negotiations for placement opportunities as described above.
The above-described deficiencies of today's pre-installed software and services markets are merely intended to provide an overview of some of the problems of conventional systems, and are not intended to be exhaustive. Other problems with conventional systems and corresponding benefits of the various non-limiting embodiments described herein may become further apparent upon review of the following description.